life expectancy, yet [who needs] expensive, ongoing medical and/or life and financial assistance,” Rafferty says. One thing that creates claims for architects is a dispute over fees. “If an architect or engineer has to sue their client to get their fee, almost routinely there will be a countersuit for negligence of the performance of the work, creating a professional liability claim,” Hill says. “Nobody thinks about that when they are trying to collect money. Usually they are just upset. They don’t think they will get a countersuit.” It can be a pretty big exposure, Hill adds, tying in breech of contract, negligence, construction defects and more, adding insult to injury. “You don’t get paid, and you get sued. And you’ve got that black mark on your reputation – and you still don’t get paid.” Reputation protection is a big part of most professional liability coverage. “There is always a little bit of coverage there in case there is a crisis within the firm,” Hill says.
Trends and challenges
“I think the recession was a key differentiator and driver for a lot of firms” Kevin Collins, Victor O. Schinnerer & Co. Top loss exposures Loss exposures in the sector vary according to the type of PL insurance at issue. For large accounting firms, “sizable insured losses can stem from the accounting firm’s prior association with … clients caught up in high-profile scandal-ridden fraud allegations or large client bankruptcies,” Rafferty says. Larger law firms might face similar claims, especially if they offer advice and services on potentially controversial corporate matters such as merger and acquisition deals, tax opinions or complex corporate structures, Rafferty adds. Small law firms and individual lawyers, meanwhile, could face an array of claims stemming from client dissatisfaction with things like wills, marriage dissolution
and real estate transactions. Medical providers also have significant exposure. It is not uncommon for doctors and/or hospitals to get sued for misdiagnosis, mistreatment and failure to properly monitor a patient’s worsening condition, Rafferty notes. Even a local ambulatory service can have unfortunate events that prompt professional claims – from accidentally dropping a patient off the stretcher to the arguably preventable mechanical breakdown of the ambulatory vehicle itself, preventing the patient access to timely treatment. “In the medical arena, often the largest insurance claims involve alleged malpractice in situations that have resulted in a substantially impaired or disabled patient with a long
Hill has observed that risk managers and owners in the engineering and architecture sector are requiring higher and higher limits all the time. Lately, he says, there is a growing trend of small firms being asked to provide large limits so they can work on projects – “which is always a problem when you don’t have revenue to offset the kind of liability that these people can be inclined to carry. When an account with $100,000 in revenue needs to buy a $5 million limit, it can be a pretty significant cost to them, and an exposure to the carrier, too.” Geotech and soils engineering also can be a difficult piece to underwrite for professional liability coverage. “Their projects aren’t very big, and their revenue per project isn’t as large, but what they do is really important to the process,” Hill explains. “That becomes a difficult exposure because a failure in that area leads to a lot of problems in the rest of the construction.” In the energy sector, meanwhile, professionals working with pipelines are at significant risk. “From what I’ve seen of covered losses, some of them pretty darn big – like many millions of dollars,” Hill says.
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